Exhibit 10.5

THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT").  THE SECURITIES
MAY  NOT BE  SOLD,  TRANSFERRED  OR  ASSIGNED  IN THE  ABSENCE  OF AN  EFFECTIVE
REGISTRATION  STATEMENT  FOR THE  SECURITIES  UNDER THE  SECURITIES  ACT,  OR AN
OPINION OF COUNSEL,  IN FORM,  SUBSTANCE  AND SCOPE  CUSTOMARY  FOR  OPINIONS OF
COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES ACT.

                     9% SENIOR SUBORDINATED CONVERTIBLE NOTE

October 15, 2004                                                       $________

      FOR VALUE RECEIVED,  DYNTEK, INC., a corporation  organized under the laws
of the State of Delaware (hereinafter called the "Borrower"), hereby promises to
pay  to  the  order  of   ______________________   (the  "Holder")  the  sum  of
________________________  Dollars  ($_____________)  (the  "Principal  Amount"),
payable  $____________  on the first day of each month  commencing  July 1, 2005
("Mandatory  Prepayments"),  with any remaining  Principal Amount due on October
15, 2007 (the  "Maturity  Date"),  and to pay  interest on the unpaid  Principal
Amount  from the date of this  Note at the rate of nine  percent  (9%) per annum
from the date hereof (the "Issue Date"),  payable  quarterly on April 1, July 1,
October 1 and  January  1 (each  quarterly  interest  payment  date  hereinafter
collectively  referred  to as an  "Interest  Payment  Date"),  and at  Maturity,
whether by declaration,  acceleration or otherwise.  Any Principal  Amount of or
interest on this Note which,  to the extent not converted in accordance with the
provisions  hereof,  is not paid when due  shall  bear  interest  at the rate of
sixteen percent (16%) per annum  ("Default  Interest") from the due date thereof
until the same is paid. Interest shall be calculated based on a 360-day year and
shall commence accruing on the Issue Date.

      Interest on the unpaid Principal  Amount hereof,  other than in connection
with a prepayment of the Principal Amount at the option of the Borrower, and any
installment of Mandatory  Prepayment of the Principal  Amount hereof may, at the
option of the  Borrower,  be paid in shares of Common  Stock (as  defined in the
Purchase  Agreement)  with  an  aggregate  value,  valuing  each  share  at  the
Conversion  Price,  equal  in value  to the  amount  of  interest  or  Mandatory
Prepayment of the Principal  Amount payable,  provided that such payments may be
made in shares of Common Stock ("Payment Shares") only if the Borrower satisfies
the Liquidity  Conditions  (as defined  herein) and provided  further,  that the
Closing Price of the Common Stock shall be 115% of the Conversion  Price on each
of the ten  (10)  Trading  Days  prior  to the date of  payment  (the  "Borrower
Conversion  Condition") and that the Borrower has provided written notice to the
Holder of its  election to issue  Payment  Shares at least ten (10) Trading Days
prior to the date of payment if the Borrower Conversion  Condition is satisfied.
"Liquidity  Conditions"  shall mean that (i) all of the  shares of Common  Stock
issuable  upon  conversion  of the Notes are (x)  authorized  and  reserved  for
issuance,  (y)  registered  for resale  under the 1933 Act by the Holders of the
Notes (or may otherwise be resold publicly without
<PAGE>

restriction)  and (z)  eligible  to be traded on Nasdaq,  the NYSE,  the AMEX or
Nasdaq  SmallCap  and (ii) there is not then a continuing  Mandatory  Redemption
Event.  "Closing Price," as of any date, means the last sale price of the Common
Stock on Nasdaq as  reported by  Bloomberg  Financial  Markets or an  equivalent
reliable  reporting service mutually  acceptable to and hereafter  designated by
the holders of a majority of the outstanding  Principal  Amount of the Notes and
the Borrower ("Bloomberg") or, if Nasdaq is not the principal trading market for
such security,  the last sale price of such security on the principal securities
exchange or trading  market where such  security is listed or traded as reported
by Bloomberg,  or, if no last sale price of such security is available in any of
the  foregoing  manners,  the average of the bid prices of any market makers for
such  security  that are listed in the "pink  sheets" by the National  Quotation
Bureau, Inc. If the Closing Price cannot be calculated for such security on such
date in the manner  provided  above,  the Closing Price shall be the fair market
value as mutually  determined  by the  Borrower and the holders of a majority of
the outstanding  Principal  Amount of the Notes for which the calculation of the
Closing Price is required.  "Trading Day" shall mean any day on which the Common
Stock is  traded  for any  period  on  Nasdaq,  or on the  principal  securities
exchange  or other  securities  market on which the  Common  Stock is then being
traded.

      All payments  shall be made at such address as the Holder shall  hereafter
give to the Borrower by written notice made in accordance with the provisions of
this Note.  The  Maturity  Date is subject  to  extension,  at the option of the
Holder, as provided in Article IV hereof.

      This  Note is being  issued  by the  Borrower  pursuant  to the 9%  Senior
Subordinated  Convertible  Note,  dated as of  October  15,  2004,  between  the
Borrower,  the Holder and the other  purchasers  named  therein  (the  "Purchase
Agreement"). Each capitalized term used, but not otherwise defined, herein shall
have the  meaning  ascribed  thereto in the  Purchase  Agreement.  For  purposes
hereof,  the term  "Notes"  shall be  deemed  to refer to this  Note,  all other
convertible notes issued pursuant to the Purchase  Agreement and all convertible
notes issued in  replacement  hereof or thereof or otherwise with respect hereto
or thereto.

                                 I. REDEMPTION

      A.  Mandatory  Redemption.  If  any  of  the  following  events  (each,  a
"Mandatory Redemption Event") shall occur:

            1. The Borrower fails to pay the Principal Amount hereof or interest
thereon when due,  whether on the Interest  Payment Date,  the Maturity Date, or
upon  Mandatory  Prepayment  pursuant  to  Article  I.B,  upon  acceleration  or
otherwise;

            2. The  Borrower  (i) fails to issue  shares of Common  Stock to any
holder of the Notes  upon  exercise  by the holder of its  conversion  rights in
accordance with the terms of the Notes (for a period of at least sixty (60) days
if such  failure  is  solely as a result of the  circumstances  governed  by the
second  paragraph  of  Article  II.E  below and the  Borrower  is using its best
efforts to  authorize a  sufficient  number of shares of Common Stock as soon as
practicable),  (ii) fails to transfer or to cause its transfer agent to transfer
(electronically  or in

                                       2
<PAGE>

certificated  form) any  certificate  for shares of Common  Stock  issued to any
Holder  upon  conversion  of or  otherwise  pursuant  to the  Notes  as and when
required  by the  Notes,  the  Purchase  Agreement  or the  Registration  Rights
Agreement, dated as of October 15, 2004, by and among the Borrower and the other
signatories thereto (the "Registration Rights Agreement"), (iii) fails to remove
any restrictive legend (or to withdraw any stop transfer instructions in respect
thereof) on any  certificate or any shares of Common Stock issued to the holders
of the Notes upon  conversion of or otherwise  pursuant to the Notes as and when
required  by the  Notes,  the  Purchase  Agreement  or the  Registration  Rights
Agreement,  and any such failure shall  continue  uncured (or any  announcement,
statement  or threat  not to honor its  obligations  shall not be  rescinded  in
writing)  for  fifteen  (15)  Trading  Days after the  Borrower  shall have been
notified  thereof in writing by any holder of the Notes or (iv) fails to fulfill
its obligations  pursuant to Article IV of the Purchase  Agreement (or makes any
announcement,  statement  or  threat  that it  does  not  intend  to  honor  the
obligations  described in this  paragraph),  and any such failure shall continue
uncured (or any  announcement,  statement or threat not to honor its obligations
shall not be rescinded  in writing)  for ten (10) days after the Borrower  shall
have been notified thereof in writing by any Holder of the Notes;

            3. The Borrower  fails to obtain  effectiveness  with the Securities
and  Exchange   Commission  (the  "SEC")  prior  to  January  15,  2005  of  the
Registration  Statement (as defined in the Registration  Rights  Agreement,  the
"Registration  Statement")  required to be filed pursuant to Section 2(a) of the
Registration  Rights  Agreement,  or fails to obtain  the  effectiveness  of any
additional  Registration  Statement  (required  to be filed  pursuant to Section
2(i)of  the  Registration  Rights  Agreement)  within  sixty (60) days after the
Effective Date (as defined in the Registration  Rights  Agreement),  or any such
Registration   Statement,   after  its  initial  effectiveness  and  during  the
Registration Period (as defined in the Registration Rights Agreement), lapses in
effect  or  sales  of all of  the  Registrable  Securities  (as  defined  in the
Registration Rights Agreement, the "Registrable Securities") otherwise cannot be
made  thereunder  (whether  by  reason  of the  Borrower's  failure  to amend or
supplement the prospectus  included  therein in accordance with the Registration
Rights Agreement,  the Borrower's failure to file and obtain  effectiveness with
the SEC of an additional  Registration  Statement  required  pursuant to Section
2(i) of the  Registration  Rights  Agreement or otherwise)  for more than thirty
(30)  consecutive  days or more than sixty  (60) days in any  twelve  (12) month
period after such Registration Statement becomes effective;

            4. The  Borrower or any  subsidiary  of the  Borrower  shall make an
assignment  for the  benefit  of  creditors,  or  apply  for or  consent  to the
appointment of a receiver or trustee for it or for all or  substantially  all of
its  property or  business;  or such a receiver or trustee  shall  otherwise  be
appointed;

            5. Bankruptcy, insolvency, reorganization or liquidation proceedings
or other  proceedings  for relief  under any  bankruptcy  law or any law for the
relief  of  debtors  shall be  instituted  by or  against  the  Borrower  or any
subsidiary of the Borrower;

            6. The  Borrower  shall fail to  maintain  the listing of the Common
Stock on the Nasdaq National Market ("Nasdaq"),  the Nasdaq SmallCap Market (the
"Nasdaq

                                       3
<PAGE>

SmallCap"),  the New York Stock  Exchange  (the  "NYSE") or the  American  Stock
Exchange ("AMEX");

            7. The sale,  conveyance or disposition of all or substantially  all
of the assets of the Borrower, the effectuation by the Borrower of a transaction
or series of related  transactions in which more than 50% of the voting power of
the  Borrower is disposed  of, or the  consolidation,  merger or other  business
combination  of the  Borrower  with or into any other  individual,  corporation,
limited liability company,  partnership,  association,  trust or other entity or
organization  (each,  a  "Person")  or  Persons  when  the  Borrower  is not the
survivor;

            8. The  Borrower  breaches  any  covenant  contained  in Article III
hereof and such  breach  continues  uncured  for a period of ten (10) days after
written notice thereof to the Borrower from any holder of Notes;

            9. The Borrower shall have incurred a monetary  default in excess of
$500,000 in any contract which is a "material contract" (as such term is defined
in Item 601(b)(10) of Regulation S-K as promulgated by the SEC) which default is
not cured  within  two  Trading  Days,  or a  non-monetary  default  in any such
contract which is not cured within fifteen Trading Days;

            10. Any material  representation  or warranty of the  Borrower  made
herein, in the Purchase Agreement, or in the Registration Rights Agreement shall
be materially false or misleading;

            11. Any money  judgment,  writ or  similar  final  process  shall be
entered or filed against the Borrower or any of its property or other assets for
more than  $250,000,  and shall  remain  unvacated,  unbonded or unstayed  for a
period of ninety (90) days; or

            12. An SEC stop trade order or the trading  suspension of the Common
Stock on Nasdaq (or such  principal  exchange on which the Common Stock  trades)
shall be in effect for five (5)  consecutive  Trading  Days or five (5)  Trading
Days during a period of ten (10)  consecutive  Trading  Days,  excluding  in all
cases a suspension of all trading on Nasdaq (or such principal exchange on which
the  Common  Stock  trades;  provided,  that  this  shall  only  be a  Mandatory
Redemption  Event to the extent  that the  Borrower  shall not have been able to
cure such trading  suspension  within thirty (30) days of the notice  thereof or
list the Common Stock on the Nasdaq SmallCap, the NYSE or AMEX within sixty (60)
days of such notice; or

            13. Any declared  default of the Borrower or any of its subsidiaries
under any other  Indebtedness  (as defined  below) that gives the holder thereof
the right to accelerate such other  Indebtedness  shall have occurred,  and such
other  Indebtedness is in fact  accelerated by the holder,  or in the event that
any other Indebtedness has become due and payable upon maturity and has not been
satisfied then, upon the occurrence and during the continuation of any Mandatory
Redemption  Event specified in  subparagraphs 1, 2, 3, 6, 7, 8, 9, 10, 11, 12 or
13 at the option of the Holder  exercisable  by the  delivery of written  notice
(the "Mandatory Redemption Notice") to the Borrower of such Mandatory Redemption
Event (provided that the remedies  afforded under this Article I.A shall only be
available to Holders  providing  such

                                       4
<PAGE>

notice),  or upon the occurrence of any Mandatory  Redemption Event specified in
subparagraphs  4 or 5, the  then  outstanding  Notes  shall  become  immediately
redeemable and the Borrower shall purchase each holder's  outstanding  Notes for
an amount equal to the greater of (i) 120% multiplied by the sum of (a) the then
outstanding  Principal  Amount of the  Notes,  plus (b) all  accrued  and unpaid
interest  thereon for the period  beginning  on the Issue Date and ending on the
date of payment of the Mandatory  Redemption  Amount (the "Mandatory  Redemption
Date"), plus (c) Default Interest, if any, on the amounts referred to in clauses
(a) and/or (b), plus (d) all Conversion  Default Payments (as defined in Article
II.E below),  Delivery Default Payments (as defined in Article II.D.3 below) and
any  other  amounts  owed  to  such  holder  pursuant  to  Section  2(i)  of the
Registration  Rights  Agreement,  and (ii) the "parity value" of the Notes to be
redeemed,  where  parity  value means the  product of (x) the highest  number of
shares of Common Stock issuable upon conversion of or otherwise pursuant to such
Notes in  accordance  with the terms  hereof  (without  giving any effect to any
limitations on conversions of Notes contained  herein,  and treating the Trading
Day  (as  defined  in  Article  II.B.1)  immediately   preceding  the  Mandatory
Redemption  Date as the  "Conversion  Date" (as  defined in Article  II.D.5) for
purposes of  determining  the lowest  applicable  Conversion  Price,  unless the
Mandatory  Redemption  Event  arises  as a result of a breach  in  respect  of a
specific  Conversion  Date in  which  case  such  Conversion  Date  shall be the
Conversion Date), multiplied by (y) the highest Closing Price (as defined below)
for the Common Stock during the period beginning on the date of first occurrence
of the  Mandatory  Redemption  Event and ending  one day prior to the  Mandatory
Redemption  Date (the  greater of such amounts set forth in clauses (i) and (ii)
above being referred to as the  "Mandatory  Redemption  Amount").  The Mandatory
Redemption Amount,  together with all other ancillary amounts payable hereunder,
shall  immediately  become due and payable,  all without demand,  presentment or
notice,  all of which  hereby are  expressly  waived,  together  with all costs,
including, without limitation, reasonable legal fees and expenses of collection,
and Holder shall be entitled to exercise all other rights and remedies available
at law or in equity.

      "Indebtedness,"  when  used with  respect  to the  Borrower  or any of its
subsidiaries (each, a "Borrower Person"),  and without duplication means, to the
extent that any of the following exceed $750,000 individually:

            (a) all indebtedness,  obligations and other liabilities (contingent
      or otherwise) of such Person for borrowed money (including  obligations of
      the Borrower or any of its subsidiaries in respect of overdrafts,  foreign
      exchange  contracts,  currency  exchange  agreements,  and  any  loans  or
      advances  from  banks,  whether  or not  evidenced  by  notes  or  similar
      instruments) or evidenced by bonds, debentures, notes or other instruments
      for the payment of money,  or incurred in connection  with the acquisition
      of any  property,  services or assets  (whether or not the recourse of the
      lender is to the whole of the assets of such Borrower  Person or to only a
      portion thereof),  other than any account payable or other accrued current
      liability or obligation to trade creditors incurred in the ordinary course
      of business in connection with the obtaining of materials or services;

            (b) all reimbursement  obligations and other liabilities (contingent
      or otherwise)  of such Borrower  Person with respect to letters of credit,
      bank guarantees,


                                       5
<PAGE>

      bankers' acceptances, surety bonds, performance bonds or other guaranty of
      contractual performance;

            (c) all  obligations  and  liabilities  (contingent or otherwise) in
      respect of (a) leases of such Borrower Person required, in conformity with
      GAAP, to be accounted for as capitalized  lease obligations on the balance
      sheet of such  Borrower  Person  and (b) any  lease or  related  documents
      (including  a purchase  agreement)  in  connection  with the lease of real
      property  which  provides  that  such  Borrower  Person  is  contractually
      obligated  to  purchase  or cause a third  party to  purchase  the  leased
      property  and  thereby  guarantee a minimum  residual  value of the leased
      property to the landlord and the obligations of such Borrower Person under
      such lease or related  document  to  purchase or to cause a third party to
      purchase the leased property;

            (d)  all  obligations  of  such  Borrower   Person   (contingent  or
      otherwise)  with respect to an interest rate or other swap,  cap or collar
      agreement or other  similar  instrument  or agreement or foreign  currency
      hedge, exchange, purchase or similar instrument or agreement;

            (e) all direct or indirect  guaranties or similar agreements by such
      Borrower Person in respect of, and obligations or liabilities  (contingent
      or otherwise) of such Borrower Person to purchase or otherwise  acquire or
      otherwise  assure a creditor  against  loss in respect  of,  indebtedness,
      obligations  or  liabilities  of  another  Borrower  Person  of  the  kind
      described in clauses (1) through (4) of this definition;

            (f) any indebtedness or other  obligations  described in clauses (1)
      through (5) of this  definition  secured by any lien  existing on property
      which is owned or held by such Borrower Person,  regardless of whether the
      indebtedness or other  obligation  secured thereby shall have been assumed
      by such Borrower Person; and

            (g) any and all deferrals,  renewals,  extensions and refundings of,
      or  amendments,   modifications  or  supplements  to,  any   indebtedness,
      obligation  or liability of the kind  described in clauses (1) through (6)
      of this definition.

      B.  Failure  to  Pay  Redemption  Amounts.  In  the  case  of a  Mandatory
Redemption  Event, if the Borrower fails to pay the Mandatory  Redemption Amount
within  five (5)  business  days of written  notice  that such amount is due and
payable,  then (assuming there are sufficient  authorized shares) in addition to
all other available  remedies,  the Holder shall have the right at anytime,  and
from time to time  after the  failure  to timely  pay the  Mandatory  Redemption
Amount,  so long as the Mandatory  Redemption  Event  continues,  to require the
Borrower,  upon written  notice,  to immediately  issue (in accordance  with and
subject  to the  terms of  Article  II  below),  in lieu of the  portion  of the
Mandatory  Redemption  Amount with respect to which such  election is made,  the
number  of  shares  of Common  Stock of the  Borrower  equal to such  applicable
redemption  amount divided by any Conversion Price (as defined below), as chosen
in the sole  discretion  of  Holder,  in effect  from the date of the  Mandatory
Redemption Event until the date Holder elects to exercise its rights pursuant to
this Article I.B.


                                       6
<PAGE>

                     II. CONVERSION AT THE OPTION OF HOLDER

      A. Optional Conversion

            1.  Conversion  Amount.  Subject  to the  restrictions  set forth in
Article II.A.2 below, the Holder may, at its option at any time and from time to
time prior to 5:00 pm, Eastern Standard Time, on the Maturity Date,  convert all
or any portion of this Note into Common  Stock as set forth below (an  "Optional
Conversion").  This Note shall be convertible into such number of fully paid and
nonassessable  shares of Common  Stock as such Common  Stock exists on the Issue
Date, or any other shares of capital  stock or other  securities of the Borrower
into which such  Common  Stock is  thereafter  changed  or  reclassified,  as is
determined by dividing (a) the  Conversion  Amount (as defined below) by (b) the
Conversion Price (as defined in Article II.B below); provided,  however, that in
no event  shall  Holder be  entitled  to convert  this Note in  exercise of that
dollar  amount of Notes  upon  conversion  of which the sum of (x) the number of
shares of Common Stock  beneficially  owned by Holder and its affiliates  (other
than shares of Common Stock which may be deemed  beneficially  owned through the
ownership  of the  unconverted  portion  of this  Note,  or the  unexercised  or
unconverted portion of any other securities of the Borrower (including,  without
limitation,  the  warrants  issued  by the  Borrower  pursuant  to the  Purchase
Agreement  (the  "Warrants"))  subject to a limitation on conversion or exercise
analogous to the limitations  contained  herein) and (y) the number of shares of
Common  Stock  issuable  upon the  conversion  of the  portion of this Note with
respect to which the  determination  of this proviso is being made, would result
in beneficial  ownership by Holder and Holder's  affiliates of more than 9.9% of
the  outstanding  shares of Common  Stock.  For  purposes  of the proviso to the
immediately preceding sentence,  (i) beneficial ownership shall be determined in
accordance  with  Section  13(d) of the  Securities  Exchange  Act of  1934,  as
amended, and Regulation 13D-G thereunder, except as otherwise provided in clause
(x) of such  proviso and (ii) such  proviso  may not be amended  without (a) the
written  consent of the  Holder and the  Borrower  and (b) the  approval  of the
holders of a majority of Borrower's  Common Stock  present,  or  represented  by
proxy,  and voting at any meeting  called to vote on such  proviso.  "Conversion
Amount"  means (i) the  portion  of the  Principal  Amount  of this  Note  being
converted,  plus (ii) all  accrued  and unpaid  interest  thereon for the period
beginning  on the Issue Date and ending on the  Conversion  Date (as  defined in
Article II.B.1), plus (iii) Default Interest, if any, on the amounts referred to
in the immediately  preceding  clauses (i) and/or (ii), plus (iv) any Conversion
Default  Payments (as defined in Article II.E) and Delivery Default Payments (as
defined in Article II.D.3) payable with respect thereto, together with any other
amounts  owed to Holder  pursuant  to Section  2(i) of the  Registration  Rights
Agreement.

            2. Trading  Market  Limitation.  Unless the  Borrower  either (i) is
permitted (or not  prohibited)  by the applicable  rules and  regulations of the
principal  securities  market on which the  Common  Stock is listed or traded to
issue shares of Common  Stock upon  conversion  of or otherwise  pursuant to the
Notes in excess of the  Maximum  Share  Amount  (as  defined  below) or (ii) has
obtained  stockholder  approval of the  issuance of shares of Common  Stock upon
conversion of or otherwise  pursuant to the Notes in excess of the Maximum Share
Amount in accordance  with  applicable law and the rules and  regulations of any
stock  exchange,   interdealer   quotation   system  or  other   self-regulatory
organization  with  jurisdiction over the Borrower or any of its securities (the
"Stockholder Approval"),  in no event shall the total


                                       7
<PAGE>

number of shares of Common Stock issued upon conversion of or otherwise pursuant
to the Notes  (including any shares of capital stock or rights to acquire shares
of capital stock issued by the Borrower which are aggregated or integrated  with
the Common Stock issued or issuable upon conversion of or otherwise  pursuant to
the Notes for purposes of any such rule or regulation) exceed the maximum number
of shares of Common Stock which the  Borrower can so issue  pursuant to any rule
or  regulation of the principal  United  States  securities  market on which the
Common Stock trades (the  "Maximum  Share  Amount"),  which as of the Issue Date
shall  be  11,773,439  shares  (19.99%  of the  total  shares  of  Common  Stock
outstanding on the Issue Date),  subject to equitable  adjustments  from time to
time for stock splits, stock dividends,  combinations,  capital  reorganizations
and similar events  relating to the Common Stock occurring after the Issue Date.
With  respect to each Holder of Notes,  the Maximum  Share Amount shall refer to
such Holder's pro rata share thereof  determined in accordance  with Article V.l
below. In the event that the sum of (x) the aggregate number of shares of Common
Stock  actually  issued upon  conversion of or otherwise  pursuant to the Notes,
plus (y) the  aggregate  number of shares of Common  Stock that remain  issuable
upon conversion of or otherwise  pursuant to the then  outstanding  Notes at the
then effective  Conversion  Price represents at least one hundred percent (100%)
of the Maximum Share Amount (the "Triggering  Event"), the Borrower will use its
best  efforts  to seek and obtain  Stockholder  Approval  (or obtain  such other
relief as will  allow  conversions  hereunder  in excess  of the  Maximum  Share
Amount) as soon as practicable following the Triggering Event.

      B. Conversion Price.

            1. Calculation of Conversion Price. Subject to subparagraph 2 below,
the "Conversion  Price" shall be $0.65 per share.  The Conversion Price shall be
subject  to  adjustment  from time to time for stock  splits,  stock  dividends,
combinations,  capital reorganizations and similar events relating to the Common
Stock occurring after the Issue Date and as otherwise set forth herein.

      C. Adjustments to Conversion  Price. The Conversion Price shall be subject
to adjustment from time to time as follows:

            1.  Adjustment  to  Conversion  Price  Due  to  Stock  Split,  Stock
Dividend,  Etc.  If, at any time when this Note is  outstanding,  the  number of
outstanding  shares of Common  Stock is increased or decreased by a stock split,
stock dividend, combination, reclassification, rights offering below the Trading
Price (as defined  below) to all holders of Common Stock or other similar event,
which event shall have taken place during the reference period for determination
of the Conversion Price for any Optional  Conversion,  then the Conversion Price
shall  be  calculated  giving  appropriate  effect  to the  stock  split,  stock
dividend,  combination,  reclassification or other similar event. In such event,
the Borrower  shall  notify the  Transfer  Agent of such change on or before the
effective  date  thereof.  "Trading  Price,"  which  shall be measured as of the
record date in respect of the rights offering, means (i) the average of the last
reported  sale  prices for the shares of Common  Stock on Nasdaq as  reported by
Bloomberg,  as applicable,  for the five (5) Trading Days immediately  preceding
such date, or (ii) if Nasdaq is not the principal  trading market for the shares
of Common  Stock,  the average of the last reported sale prices on the principal
trading  market  for the Common  Stock  during the same  period as


                                       8
<PAGE>

reported by Bloomberg,  or (iii) if market value cannot be calculated as of such
date on any of the foregoing  bases,  the Trading Price shall be the fair market
value as  reasonably  determined  in good faith by (x) the Board of Directors of
the  Borrower  or (y) at the option of the  holders  of a  majority  of the then
outstanding Principal Amount of the Notes, by an independent  investment bank of
nationally  recognized  standing in the valuation of  businesses  similar to the
business of the Borrower.

            2.  Adjustment  Due to Merger,  Consolidation,  Etc. If, at any time
when this Note is outstanding  and prior to the  conversion of all Notes,  there
shall  be any  merger,  consolidation,  exchange  of  shares,  recapitalization,
reorganization,  or other similar  event,  as a result of which shares of Common
Stock of the Borrower  shall be changed  into the same or a different  number of
shares of another  class or classes of stock or  securities  of the  Borrower or
another entity, or in case of any sale or conveyance of all or substantially all
of the assets of the Borrower  other than in connection  with a plan of complete
liquidation  of the Borrower  (each,  a "Change of Control  Transaction"),  then
Holder shall  thereafter  have the right to receive upon conversion of this Note
upon the basis and upon the terms and conditions specified herein and in lieu of
the shares of Common Stock immediately theretofore issuable upon such conversion
such  stock,  securities  or assets  which  Holder  would have been  entitled to
receive in such  transaction  had this Note been  converted in full  immediately
prior to such  transaction  (without  regard to any limitations on conversion or
exercise contained herein), and in any such case appropriate provisions shall be
made with  respect  to the rights  and  interests  of Holder to the end that the
provisions hereof (including,  without limitation,  provisions for adjustment of
the  Conversion  Price and of the number of shares of Common Stock issuable upon
conversion  of this Note) shall  thereafter be  applicable,  as nearly as may be
practicable in relation to any securities or assets thereafter  deliverable upon
the  conversion  of this Note.  The  Borrower  shall not effect any  transaction
described  in this  subparagraph  2 unless  (i) it first  gives,  to the  extent
practical,  thirty  (30) days' prior  written  notice (but in any event at least
fifteen  (15)  business  days prior  written  notice) of the record  date of the
special meeting of stockholders to approve,  or if there is no such record date,
the  consummation  of, such  Change of Control  Transaction  (during  which time
Holder  shall be entitled to convert  this Note),  which  notice  shall be given
concurrently with the first public  announcement of such  transaction,  and (ii)
the resulting  successor or acquiring  entity (if not the  Borrower)  and, if an
entity  different  from the  successor  or  acquiring  entity,  the entity whose
capital  stock or assets the holders of the Common Stock are entitled to receive
as a result of such Change of Control Transaction, assumes by written instrument
the  obligations  of  the  Borrower  under  this  Note  (including   under  this
subparagraph  2).  The above  provisions  shall  similarly  apply to  successive
consolidations, mergers, sales, transfers or share exchanges.

            3. Other Securities  Offerings.  (a) In case the Borrower shall, (i)
by dividend or  otherwise,  at any time  distribute to all holders of its Common
Stock cash (excluding any cash portions of  distributions  referred to elsewhere
in this Article II.C.3.) in an aggregate amount that, combined together with (a)
all other such  all-cash  distributions  made within the  preceding 12 months in
respect  to which  no  adjustment  has  been  made and (b) any cash and the fair
market of other consideration paid or payable in respect of any tender offers by
the  Borrower  for Common  Stock  concluding  within the  preceding 12 months in
respect of which no  adjustment  has been made,  exceeds  10% of the  Borrower's
market capitalization  (defined as being the product of the current market price
of the Common Stock times the number of shares


                                       9
<PAGE>

of Common Stock then  outstanding) on the record date for such  distribution (as
determined  by the  Board  of  Directors),  and or (ii)  purchase  Common  Stock
pursuant to a tender offer made by the Borrower or any of its subsidiaries which
involves an aggregate consideration that together with (a) any cash and the fair
market  value of any other  consideration  paid or payable  in any other  tender
offer by the Borrower or any of its subsidiaries of Common Stock expiring within
the 12 months  preceding the expiration of such tender offer in respect of which
no adjustment  has been made (as  determined by the Board of Directors)  and (b)
the aggregate amount of any such all-cash distributions referred to in (i) above
to all holders of Common Stock within the 12 months  preceding the expiration of
such tender offer in respect of which no adjustments have been made, exceeds 10%
of the Borrower's market  capitalization on the expiration of such tender offer,
the  Conversion  Price  shall be reduced so that the same shall  equal the price
determined by multiplying the Conversion  Price in effect  immediately  prior to
the effectiveness of the Conversion Price reduction contemplated by this Article
II.C.3.  by a fraction of which the numerator  shall be the current market price
per share  (determined as provided in this Article  II.C.3.) of the Common Stock
on the  date  of such  effectiveness  less  the  amount  of cash so  distributed
applicable  to one  share of  Common  Stock  and the  denominator  shall be such
current market price per share of the Common Stock determined as aforesaid, such
reduction to become  effective  immediately  prior to the opening of business on
the day following the date fixed for the payment of such distribution.

            (b) In case at any time on or after the Closing  Date (as defined in
the Purchase  Agreement)  the Borrower shall issue shares of its Common Stock or
instruments  convertible  into or  exercisable  for Common Stock  ("Common Stock
Equivalents") (collectively,  the "Newly Issued Shares"), other than an issuance
pro rata to all holders of its  outstanding  Common  Stock or an issuance to the
Purchasers,  at a price below the Conversion Price in effect at the time of such
issuance,  then  following  such issuance of Newly Issued Shares the  Conversion
Price shall be adjusted as follows:

                  In the case of such  issuance  occurring  when the  Conversion
            Price in effect at the time of such  issuance  is  greater  than the
            current  market  price  of  the  Common  Stock  at  such  time,  the
            Conversion  Price following any such adjustment  shall be determined
            by  multiplying  the  Conversion  Price  immediately  prior  to such
            adjustment by a fraction, of which the numerator shall be the sum of
            (a) the  number of shares of Common  Stock  outstanding  immediately
            prior to the issuance of the Newly Issued Shares plus (b) the number
            of shares of Common Stock which the aggregate consideration, if any,
            received by the Borrower for the number of Newly Issued Shares would
            purchase  at a  price  equal  to  the  Conversion  Price  in  effect
            immediately prior to the time of such issuance,  and the denominator
            shall  be the  sum of (X) the  number  of  shares  of  Common  Stock
            outstanding  immediately  prior to the  issuance of the Newly Issued
            Shares plus (Y) the number of Newly Issued  Shares.  The  adjustment
            provided for in this  paragraph  may be  expressed as the  following
            mathematical formula:


                                       10
<PAGE>

                                   (O+(C/CP)) X CP
                                   ----------
                        NCP  =     ( O + N  )

            where:

            C      =    aggregate consideration received by the Borrower for the
                        Newly Issued Shares

            N      =    number of Newly Issued Shares

            O      =    number of shares of Common Stock outstanding immediately
                        prior to the issuance of the Newly Issued Shares

            FMV    =    current  market price of the Common Stock at the time of
                        issuance of the Newly Issued Shares

            CP     =    Conversion  Price  immediately  prior to the issuance of
                        the Newly Issued Shares

            NCP    =    Conversion Price  immediately  after the issuance of the
                        Newly Issued Shares

            In no  instance  shall an  adjustment  be made  under  this  Article
      II.C.3. if it would cause the Conversion Price to be increased.

            Notwithstanding  the  foregoing,  no adjustment  shall be made under
      this Article II.C.3. by reason of:

            (1) the  issuance by the Borrower of shares of Common Stock pro rata
      to all holders of the Common  Stock so long as (i) any  adjustment  to the
      Conversion Price that is required  elsewhere in this Note is made and (ii)
      the  Borrower  shall have  given  notice of such  issuance  thereof to the
      Holder;

            (2) the  issuance by the  Borrower of the Notes and the Warrants (as
      defined in the Purchase  Agreement)  pursuant to the Purchase Agreement or
      the issuance by the Borrower of shares of Common Stock upon  conversion of
      the Notes in accordance with the terms hereof and thereof or upon exercise
      of the Warrants in accordance  with the terms thereof,  provided,  that if
      notes substantially similar to the Notes are issued by the Borrower within
      60 days of the Closing  Date,  with a conversion  price lower than that of
      the Notes (the "New Conversion Price") then notwithstanding the adjustment
      provisions  of this Article  II.C.3.,  the  Conversion  Price of the Notes
      shall be reduced to the New Conversion Price;


                                       11
<PAGE>

            (3) the  issuance by the Borrower of shares of Common Stock upon the
      exercise or conversion of securities of the Borrower outstanding as of the
      date of this Agreement; and

            (4) the  issuance  by the  Borrower  of shares  of  Common  Stock or
      options or other rights to purchase  Common  Stock  pursuant to any equity
      incentive plan in effect on the date hereof.

            (5) Additionally, notwithstanding the foregoing, no adjustment shall
      be made to the Conversion  Price or to the exercise price of the Warrants,
      the  Placement  Warrants  (as defined in the  Purchase  Agreement)  or the
      Additional  Warrants to the extent such adjustment  would cause the number
      of  Underlying  Shares  (as  defined  in  the  Purchase  Agreement),  when
      aggregated with other issuances of securities of the Borrower  required to
      be  aggregated  in  accordance  with  the  Nasdaq  Marketplace  Rules  and
      interpretations  thereunder,  to exceed nineteen and  nine-tenths  percent
      (19.9%) of the Common  Stock of the  Borrower  outstanding  on the Closing
      Date or the date of the initial  issuance under a prior offering,  if such
      prior   offering   would  be   aggregated   pursuant  to  such  Rules  and
      interpretations with the Underlying Shares.

For the purpose of any  computation  under this  Article  II.C.3.  the  "current
market price" per share of Common Stock on any date after the Closing Date shall
be deemed to be the average of the daily closing prices for the five consecutive
trading days immediately  preceding the date in question.  The closing price for
each day shall be the last sale  price or, in case no such sale  takes  place on
such day, the average of the closing bid and asked prices, in either case on the
Nasdaq or, if the shares of Common  Stock are not listed or  admitted to trading
on the Nasdaq, on the principal  national  securities market on which the shares
are listed or  admitted  to  trading,  or if they are not listed or  admitted to
trading on any national  securities  market, the closing bid and asked prices as
furnished by any member of the National Association of Securities Dealers,  Inc.
selected from time to time by the Borrower for that purpose.

            4. Adjustment Due to Distribution. If, at any time when this Note is
outstanding,  the Borrower shall declare or make any  distribution of its assets
(or rights to acquire  its  assets)  to holders of Common  Stock as a  dividend,
stock  repurchase,  by way of return of  capital  or  otherwise  (including  any
dividend or  distribution  to the Borrower's  shareholders in cash or shares (or
rights to acquire  shares) of capital stock of a subsidiary  (i.e., a spin-off))
(a "Distribution"),  then Holder shall be entitled,  upon any conversion of this
Note  after the date of record for  determining  shareholders  entitled  to such
Distribution, to receive the amount of such assets which would have been payable
to  Holder  with  respect  to the  shares  of Common  Stock  issuable  upon such
conversion  had  Holder  been the holder of such  shares of Common  Stock on the
record date for the determination of shareholders entitled to such Distribution.

            5. Purchase  Rights.  If, at any time when this Note is outstanding,
the Borrower  issues any  convertible  securities  or rights to purchase  stock,
warrants,  securities or other property (the "Purchase  Rights") pro rata to the
record  holders of any class of Common  Stock,  then  Holder will be entitled to
acquire,  upon the terms  applicable  to such  Purchase  Rights,


                                       12
<PAGE>

the  aggregate  Purchase  Rights which Holder could have  acquired if Holder had
held the number of shares of Common Stock acquirable upon complete conversion of
this Note (without regard to any limitations on conversion or exercise contained
herein  and  based  upon  the  Conversion  Price  as  would  then be in  effect)
immediately  before the date on which a record is taken for the grant,  issuance
or sale of such Purchase Rights,  or, if no such record is taken, the date as of
which the record  holders of Common  Stock are to be  determined  for the grant,
issue or sale of such Purchase Rights.

      D. Mechanics of  Conversion.  In order to convert this Note into shares of
Common Stock,  Holder shall:  (1) submit a copy of the fully executed  notice of
conversion in the form attached  hereto as Exhibit A ("Notice of Conversion") to
the Borrower by facsimile dispatched prior to Midnight,  New York City time (the
"Conversion Notice  Deadline"),  on the date specified therein as the Conversion
Date (as  defined  in  Article  II.D.5)  (or by other  means  resulting  in,  or
reasonably  expected to result in,  written  notice to the  Borrower on the date
specified  therein as the Conversion  Date) to the office of the Borrower or its
designated  Transfer  Agent  for the  Notes,  which  notice  shall  specify  the
Principal Amount of this Note to be converted,  the applicable  Conversion Price
and a  calculation  of the number of shares of Common Stock  issuable  upon such
conversion;  and (2) subject to Article II.D.1 below,  surrender this Note along
with a copy of the Notice of Conversion to the office of the Borrower as soon as
practicable  thereafter.  In the case of a dispute as to the  calculation of the
Conversion  Price,  the Borrower  shall  promptly issue that number of shares of
Common Stock as is not disputed in accordance with  subparagraph  (3) below. The
Borrower shall submit the disputed  calculations  to its outside  accountant via
facsimile  within two (2) business days of receipt of the Notice of  Conversion.
The accountant  shall audit the  calculations and notify the Borrower and Holder
of the results no later than four (4) Trading Days from the time it receives the
disputed calculations.  The accountant's  calculation shall be deemed conclusive
absent manifest error.

            1. Surrender of Note Upon  Conversion.  Notwithstanding  anything to
the contrary set forth herein,  upon  conversion of this Note in accordance with
the terms hereof, Holder shall not be required to physically surrender this Note
to the Borrower  unless the entire  unpaid  Principal  Amount of this Note is so
converted.  Holder and the Borrower shall maintain records showing the Principal
Amount so converted  and the dates of such  conversions  or shall use such other
method, reasonably satisfactory to Holder and the Borrower, so as not to require
physical  surrender of this Note upon each such conversion.  In the event of any
dispute or  discrepancy,  such records of the Borrower shall be controlling  and
determinative in the absence of manifest error.  Notwithstanding  the foregoing,
if any portion of this Note is converted as  aforesaid,  Holder may not transfer
this Note unless Holder first  physically  surrenders this Note to the Borrower,
whereupon the Borrower will forthwith issue and deliver upon the order of Holder
a new Note of like tenor, registered as Holder may request,  representing in the
aggregate the remaining  unpaid  Principal  Amount of this Note.  Holder and any
assignee,  by acceptance of this Note,  acknowledge and agree that, by reason of
the  provisions  of this  paragraph,  following  conversion of a portion of this
Note, the unpaid and unconverted  Principal Amount of this Note may be less than
the amount stated on the face hereof.

            2. Lost or Stolen Notes. Upon receipt by the Borrower of evidence of
the loss,  theft,  destruction  or mutilation of this Note,  and (in the case of
loss,  theft  or  destruction)  of


                                       13
<PAGE>

indemnity  reasonably  satisfactory  to the  Borrower,  and upon  surrender  and
cancellation of this Note, if mutilated,  the Borrower shall execute and deliver
a new Note of like tenor and date.

            3. Delivery of Common Stock Upon Conversion.  Upon the submission of
a Notice of Conversion,  the Borrower shall,  within two (2) business days after
the  Conversion  Date (the "Delivery  Period"),  issue and deliver (or cause its
Transfer Agent to so issue and deliver) in accordance  with the terms hereof and
the  Purchase  Agreement to or upon the order of Holder that number of shares of
Common Stock for the portion of this Note  converted as shall be  determined  in
accordance  herewith.  In addition to any other  remedies  available  to Holder,
including  actual damages  and/or  equitable  relief,  the Borrower shall pay to
Holder  $2,000  per day in cash for each day  beyond a two (2) day grace  period
following the Delivery Period that the Borrower fails to deliver Common Stock (a
"Delivery Default") issuable upon conversion of this Note pursuant to the Notice
of  Conversion  until such time as the  Borrower has  delivered  all such Common
Stock (the "Delivery Default Payments"). Such Delivery Default Payments shall be
paid to Holder by the fifth (5th) day of the month  following the month in which
they have accrued or, at the option of Holder (by written notice to the Borrower
by the first day of the month  following the month in which they have  accrued),
shall be  convertible  into Common  Stock in  accordance  with the terms of this
Article II.

            In lieu of delivering physical certificates  representing the Common
Stock  issuable  upon  conversion,  provided the  Borrower's  Transfer  Agent is
participating in the Depository Trust Borrower ("DTC") Fast Automated Securities
Transfer  ("FAST")  program,  upon written  request of Holder and its compliance
with the  provisions  contained in Article II.A and in this  Article  II.D,  the
Borrower   shall  use  its  best  efforts  to  cause  its   Transfer   Agent  to
electronically  transmit the Common Stock issuable upon  conversion to Holder by
crediting  the  account of  Holder's  Prime  Broker with DTC through its Deposit
Withdrawal Agent Commission  ("DWAC") system.  The time periods for delivery and
penalties  described in the immediately  preceding  paragraph shall apply to the
electronic transmittals described herein.

            4. No Fractional Shares. If any conversion of this Note would result
in a fractional share of Common Stock or the right to acquire a fractional share
of Common Stock,  such  fractional  share shall be disregarded and the number of
shares of Common Stock  issuable upon  conversion of this Note shall be the next
higher number of shares.

            5.  Conversion  Date.  The  "Conversion  Date"  shall  be  the  date
specified in the Notice of Conversion, provided that the Notice of Conversion is
submitted by facsimile (or by other means  resulting in, or reasonably  expected
to result in,  written  notice) to the  Borrower or its  Transfer  Agent  before
Midnight, New York City time, on the date so specified, otherwise the Conversion
Date shall be the first  business  day after the date so  specified on which the
Notice of Conversion is actually received by the Borrower or its Transfer Agent.
The person or persons  entitled to receive the shares of Common  Stock  issuable
upon  conversion  of this Note shall be treated  for all  purposes as the record
holder or holders of such  securities as of the  Conversion  Date and all rights
with  respect to this Note (or  portion  thereof)  surrendered  shall  forthwith
terminate  except  the right to  receive  the  shares  of Common  Stock or other
securities or property issuable on such conversion (or exercise) and except that
the holders  preferential  rights as a Holder of this Note shall  survive to the
extent the Borrower fails to deliver such securities.


                                       14
<PAGE>

      E.  Reservation  of  Shares.  A number  of shares  of the  authorized  but
unissued  Common Stock  sufficient to provide for the  conversion in full of the
Notes outstanding  (based on Conversion Price in effect from time to time) shall
at all times be reserved by the Borrower,  free from preemptive rights, for such
conversion or exercise.  As of the Issue Date, authorized and unissued shares of
Common  Stock equal to the Maximum  Share  Amount  have been duly  reserved  for
issuance upon  conversion  of the Notes (the  "Reserved  Amount").  The Reserved
Amount shall be increased  from time to time in accordance  with the  Borrower's
obligations pursuant to Section 4(g) of the Purchase Agreement.  In addition, if
the  Borrower  shall  issue any  securities  or make any  change in its  capital
structure which would change the number of shares of Common Stock into which the
Notes shall be convertible, the Borrower shall at the same time also make proper
provision so that  thereafter  there shall be a  sufficient  number of shares of
Common  Stock  authorized  and  reserved,   free  from  preemptive  rights,  for
conversion of the Notes.

            If at any time  Holder  submits  a  Notice  of  Conversion,  and the
Borrower does not have sufficient authorized but unissued shares of Common Stock
duly reserved and available for issuance to effect such conversion in accordance
with the  provisions  of this Article II (a  "Conversion  Default"),  subject to
Article  V.I,  the  Borrower  shall  issue to Holder all of the shares of Common
Stock which are available to effect such conversion and exercise, if applicable.
The  portion  of the  Principal  Amount of this Note  included  in the Notice of
Conversion  which exceeds the amount which is then  convertible (or exercisable)
into   available   shares  of  Common   Stock  (the  "Excess   Amount")   shall,
notwithstanding  anything to the contrary  contained herein,  not be convertible
(or  exercisable)  into Common Stock in  accordance  with the terms hereof until
(and at Holder's option at any time after) the date additional  shares of Common
Stock are authorized and duly reserved by the Borrower to permit such conversion
(or exercise),  at which time the Conversion  Price in respect  thereof shall be
the  lesser  of (i) the  Conversion  Price on the  Conversion  Default  Date (as
defined below) and (ii) the Conversion  Price on the Conversion  Date elected by
Holder in respect thereof.  The Borrower shall use its best efforts to effect an
increase in the authorized  number of shares of Common Stock as soon as possible
following the earlier of (x) such time that Holder notifies the Borrower or that
the  Borrower  otherwise  becomes  aware  that  there  are  or  likely  will  be
insufficient  authorized and unissued shares to allow full conversion hereof and
(y) a Conversion Default.

      F. Notice of Conversion  Price  Adjustments.  Upon the  occurrence of each
adjustment or readjustment of the Conversion  Price pursuant to this Article II,
the  Borrower,  at its  expense,  shall  promptly  compute  such  adjustment  or
readjustment  in  accordance  with the terms  hereof and  prepare and furnish to
Holder a certificate  setting forth such adjustment or readjustment  and showing
in detail the facts upon which such  adjustment or  readjustment  is based.  The
Borrower shall, upon the written request at any time of Holder, furnish or cause
to be furnished to Holder a like  certificate  setting forth (i) such adjustment
or  readjustment,  (ii) the Conversion Price at the time in effect and (iii) the
number of shares of Common Stock and the amount,  if any, of other securities or
property which at the time would be received upon conversion of this Note.


                                       15
<PAGE>

                             III. CERTAIN COVENANTS

      A.  Distributions on Capital Stock. So long as the Borrower shall have any
obligation under this Note, the Borrower shall not, without the Holder's written
consent,  (a) pay, declare or set apart for such payment,  any dividend or other
distribution  (whether  in cash,  property  or other  securities)  on  shares of
capital  stock or (b) directly or  indirectly  through any  subsidiary  make any
other payment or distribution in respect of its capital stock.

      B.  Restriction on Stock  Repurchases.  So long as the Borrower shall have
any obligation  under this Note,  the Borrower  shall not,  without the Holder's
written consent, redeem, repurchase or otherwise acquire (whether for cash or in
exchange for property or other  securities or otherwise) in any one  transaction
or series of related transactions any shares of capital stock of the Borrower or
any warrants, rights or options to purchase or acquire any such shares.

      C.  Borrowings.  So long as the Borrower shall have any  obligation  under
this Note, the Borrower shall not, without the written consent of the holders of
a majority of the then outstanding Principal Amount of the Notes, create, incur,
assume or suffer to exist any liability for borrowed  money senior or pari passu
in rank to the Notes,  except (a)  borrowings  in  existence or committed on the
date  hereof or renewals or  refundings  thereof on same or better  terms for no
more than the original amount thereof, plus in the case of financings secured by
a pledge of accounts  receivable,  an increase by no more than the same  percent
that the net sales of the Company for the fiscal quarter ended next prior to the
date of the renewal or refunding  have increased as compared to net sales of the
Company for the quarter  ended  September  30,  2004;  provided the Borrower has
informed Holder in writing prior to the date hereof or (b) indebtedness to trade
creditors incurred in the ordinary course of business.

      D. Sale of Assets. So long as the Borrower shall have any obligation under
this Note, the Borrower shall not, without the written consent of the holders of
a majority of the then outstanding Principal Amount of the Notes, sell, lease or
otherwise  dispose of any  material  amount of its assets  outside the  ordinary
course  of  business.  Any  consent  to the  disposition  of any  assets  may be
conditioned on a specified use of the proceeds of disposition.

      E. Advances and Loans.  So long as the Borrower  shall have any obligation
under this Note,  the  Borrower  shall not,  without the written  consent of the
holders of a majority  of the then  outstanding  Principal  Amount of the Notes,
lend money,  give credit or make advances to any person,  firm, joint venture or
corporation,  including,  without limitation,  officers,  directors,  employees,
subsidiaries and affiliates of the Borrower,  except loans,  credits or advances
(a) in  existence  or  committed  on the date hereof and which the  Borrower has
informed Holder in writing prior to the date hereof, or (b) made in the ordinary
course of business.

      F.  Contingent  Liabilities.  So  long  as the  Borrower  shall  have  any
obligation  under this Note, the Borrower shall not, without the written consent
of the holders of a majority  of the then  outstanding  Principal  Amount of the
Notes, assume, guarantee,  endorse,  contingently agree to purchase or otherwise
become  liable upon the  obligation  of any  person,  firm,  partnership,  joint
venture or corporation,  except by the endorsement of negotiable instruments for
deposit or  collection  and except  assumptions,  guarantees,  endorsements  and
contingencies  (a) in  existence


                                       16
<PAGE>

or committed  on the date hereof and which the  Borrower has informed  Holder in
writing prior to the date here of, or (b) similar  transactions  in the ordinary
course of business.

      G.  Variable  Rate  Transactions.  The  Borrower  shall not, and shall not
permit its  subsidiaries  to, effect or enter into any agreement which affects a
subsequent  financing  involving a Variable Rate  Transaction.  A "Variable Rate
Transaction"  shall mean any  transaction in which the Borrower  issues or sells
(i) any debt or equity  securities  that are convertible  into,  exchangeable or
exercisable  for,  or include the right to receive  additional  shares of Common
Stock either (A) at a conversion,  exercise or exchange rate or other price that
is based upon and/or  varies with the trading  prices of or  quotations  for the
shares of Common  Stock at any time after the  initial  issuance of such debt or
equity securities, or (B) with a conversion,  exercise or exchange price that is
subject to being reset at some  future  date after the initial  issuance of such
debt or equity security or upon the occurrence of specified or contingent events
directly or indirectly related to the business of the Borrower or the market for
the Common Stock if in either case additional  shares of Common Stock may in any
circumstances be issuable based on a market price below the Conversion Price.

                                  IV. MATURITY

      The entire Principal  Amount of the Notes then outstanding  (together with
any accrued and unpaid interest thereon,  Default Interest,  Conversion  Default
Payments, Delivery Default Payments and all other amounts due and payable by the
Borrower  pursuant to Section 2(i) of the Registration  Rights Agreement) on the
Maturity Date, shall be paid by the Borrower to the Holder in cash.

                                V. MISCELLANEOUS

      A. Failure of  Indulgence  Not Waiver.  No failure or delay on the part of
Holder in the exercise of any power, right or privilege  hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege  preclude other or further  exercise  thereof or of any other
right, power or privilege.

      B. Notices.  Any notices required or permitted to be given under the terms
of this Note shall be sent by  certified  or  registered  mail  (return  receipt
requested)  or  delivered  personally  or by  courier  (including  a  recognized
overnight  delivery  service) or by facsimile,  and shall be effective five days
after  being  placed in the mail,  if  mailed,  or upon  receipt  or  refusal of
receipt,  if delivered  personally or by courier or by  facsimile,  in each case
addressed to a party. The addresses for such communications shall be:


                                       17
<PAGE>

                If to the Borrower:

                         DynTek, Inc.
                         18881 Von Karman Avenue, Suite 250
                         Irvine, CA  92612
                         Attention:  Chief Executive Officer
                         Facsimile:

                With copy to:

                         Stradling Yocca Carlson & Rauth
                         660 Newport Center Drive, Suite 1600
                         Newport Beach, CA  92660-6422
                         Attention:  Christopher D. Ivey, Esq.
                         Facsimile:  (949) 725-4100

      If to Holder, to the address set forth opposite Holder's name on Exhibit 1
to the  Purchase  Agreement  or such  other  address as is  communicated  to the
Borrower by notice by Holder in accordance with the terms hereof.

                With copy to:

                         Katten Muchin Zavis Rosenman
                         575 Madison Avenue
                         New York, NY  10022-2585
                         Attention:  Robert L. Kohl, Esq.
                         Facsimile:  (212) 940-6557

      C. Amendment Provision.  The Notes may be amended only by an instrument in
writing  signed  by the  Borrower  and the  holders  of a  majority  of the then
outstanding Principal Amount of the Notes.

      D.  Assignability.  This Note shall be binding  upon the  Borrower and its
successors  and  assigns  and  shall  inure to the  benefit  of  Holder  and its
successors and assigns. In the event Holder shall sell or otherwise transfer any
portion of this Note, each  transferee  shall be allocated a pro rata portion of
such transferor's  Maximum Share Amount and Reserved Amount.  Any portion of the
Maximum Share Amount or Reserved Amount which remains allocated to any person or
entity which does not hold any Notes shall be allocated to the remaining holders
of Notes,  pro rata  based on the total  Principal  Amount of Notes then held by
such holders.

      E. Cost of Collection. If default is made in the payment of this Note, the
Borrower shall pay Holder costs of collection,  including reasonable  attorneys'
fees.

      F.  Governing  Law.  This  Note  shall be  governed  by and  construed  in
accordance  with the laws of the State of Delaware  applicable to contracts made
and to be performed in the State of Delaware  (without  regard to  principles of
conflict of laws). The Borrower and Holder


                                       18
<PAGE>

irrevocably  consent to the exclusive  jurisdiction of the United States federal
courts and state courts  located in New York in any suit or proceeding  based on
or arising under this Note, the agreements  entered into in connection  herewith
or the transactions  contemplated  hereby or thereby and irrevocably  agree that
all claims in  respect  of such suit or  proceeding  may be  determined  in such
courts. The Borrower and Holder irrevocably waive the defense of an inconvenient
forum to the  maintenance  of such suit or  proceeding.  The Borrower and Holder
further  agree that  service of process  upon a party mailed by first class mail
shall be deemed in every respect  effective service of process upon the party in
any such suit or proceeding. Nothing herein shall affect Holder's right to serve
process in any other manner permitted by law. The Borrower and Holder agree that
a final  non-appealable  judgment  in any  such  suit  or  proceeding  shall  be
conclusive and may be enforced in other  jurisdictions  by suit on such judgment
or in any other lawful manner.

      G.  Denominations.  At the request of Holder, upon surrender of this Note,
the  Borrower  shall  promptly  issue  new  Notes in the  aggregate  outstanding
Principal Amount hereof, in the form hereof,  in such  denominations of at least
$25,000 as Holder shall request.

      H.  Payment of Cash;  Defaults.  Whenever the Borrower is required to make
any cash payment to Holder under this Note (as a Conversion  Default  Payment or
otherwise but not including payments of principal and interest hereunder),  such
cash payment shall be made to Holder within five Trading Days after  delivery by
Holder of a notice specifying that Holder elects to receive such payment in cash
and the method (e.g.,  by check,  wire transfer) in which such payment should be
made  and  appropriate  delivery  instructions,  including  any  necessary  wire
transfer instructions. If such payment is not delivered within such five-Trading
Day period, Holder shall thereafter be entitled to interest on the unpaid amount
at a per annum  rate  equal to the lower of 24% and the  highest  interest  rate
permitted by applicable law until such amount is paid in full to Holder.

      I. Pro Rata Allocations.  The Maximum Share Amount and the Reserved Amount
(including  any increases  thereto)  shall be allocated by the Borrower pro rata
among the  holders  of the Notes  based on the total  Principal  Amount of Notes
originally  issued to each  holder of the Notes.  Each  increase  to the Maximum
Share  Amount and the  Reserved  Amount  shall be  allocated  pro rata among the
holders of the Notes based on the total  Principal  Amount of Notes held by each
holder at the time of the  increase  in the  Maximum  Share  Amount or  Reserved
Amount.  In the event a holder  shall  sell or  otherwise  transfer  any of such
holder's  shares of the Notes,  each  transferee  shall be  allocated a pro rata
portion of such  transferor's  Maximum  Share  Amount and Reserved  Amount.  Any
portion of the Maximum Share Amount or Reserved  Amount which remains  allocated
to any person or entity  which does not hold any the Notes shall be allocated to
the  remaining  holders  of shares  of the  Notes,  pro rata  based on the total
Principal Amount of Notes held by such holders.

      J. Status as  Noteholder.  Upon  submission  of a Notice of  Conversion by
Holder,  the  Principal  Amount of this Note and the  interest  thereon  covered
thereby  (other than any portion of this Note, if any, which cannot be converted
because the conversion  thereof would exceed such holder's  allocated portion of
the Maximum  Share Amount or Reserved  Amount)  shall be deemed  converted  into
shares of Common Stock as of the Conversion Date and Holder's


                                       19
<PAGE>

rights as a holder of this Note shall cease and  terminate,  excepting  only the
right to  receive  certificates  for such  shares  of  Common  Stock  and to any
remedies  provided  herein or  otherwise  available  at law or in equity to such
holder because of a failure by the  Corporation to comply with the terms of this
Note. Notwithstanding the foregoing, if Holder has not received certificates for
all shares of Common Stock prior to the tenth  business day after the expiration
of the Delivery Period with respect to a conversion for any reason, then (unless
Holder  otherwise  elects to retain its status as a holder of Common Stock by so
notifying  the  Corporation)  the portion of the  Principal  Amount and interest
thereon subject to such conversion shall be deemed  outstanding  under this Note
and the Corporation shall, as soon as practicable, return this Note to Holder.

      In  all  cases,  Holder  shall  retain  all  of its  rights  and  remedies
(including,  without  limitation,  (i) the right to receive  Conversion  Default
Payments  pursuant  to Article  II.F to the  extent  required  thereby  for such
Conversion  Default and any subsequent  Conversion Default and (ii) the right to
have the Conversion Price with respect to subsequent  conversions  determined in
accordance  with  Article  II.F) for the  Corporation's  failure to convert this
Note.

      K.  Remedies  Cumulative.  The  remedies  provided  in this Note  shall be
cumulative and in addition to all other remedies  available  under this Note, at
law or in  equity  (including  a decree of  specific  performance  and/or  other
injunctive  relief),  no  remedy  contained  herein  shall be deemed a waiver of
compliance  giving rise to such remedy and nothing  herein shall limit  Holder's
right to pursue  actual  damages for any failure by the  Borrower to comply with
the terms of this Note.  The  Borrower  acknowledges  that a breach by it of its
obligations  hereunder will cause irreparable harm to Holder and that the remedy
at law for any such breach may be inadequate.  The Borrower therefore agrees, in
the event of any such breach or threatened breach,  Holder shall be entitled, in
addition to all other  available  remedies,  to an  injunction  restraining  any
breach,  without the necessity of showing  economic loss and without any bond or
other security being required.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


                                       20
<PAGE>

      IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name
by its duly authorized officer as of the date first above written.

                                            DYNTEK, INC.,
                                            a Delaware corporation

                                            By:
                                               ---------------------------------
                                               Name: Steven J. Ross
                                               Title: Chief Executive Officer


                                       21
<PAGE>

                                                                       EXHIBIT A

                              NOTICE OF CONVERSION

                    (To be Executed by the Registered Holder
                         in order to Convert the Notes)

            The    undersigned    hereby    irrevocably    elects   to   convert
$________Principal  Amount of the Note  (defined  below)  into  shares of common
stock, par value $.0001 per share ("Common Stock"), of DYNTEK,  Inc., a Delaware
corporation  (the  "Borrower")  according to the  conditions of the  convertible
notes of the Borrower dated as of _______ __, 200_ (the "Notes"), as of the date
written below. If securities are to be issued in the name of a person other than
the  undersigned,  the  undersigned  will pay all  transfer  taxes  payable with
respect  thereto and is delivering  herewith such  certificates.  No fee will be
charged to the Holder for any conversion, except for transfer taxes, if any.

            The  undersigned  also  irrevocably  elects to convert  $________ of
Conversion  Default  Payments,  $________ of Delivery  Default  Payments  and/or
$_______  of  payments  pursuant  to  Section  2(c) of the  Registration  Rights
Agreement at the Applicable Conversion Price set forth below.

            The Borrower shall electronically transmit the Common Stock issuable
pursuant to this Notice of Conversion to the account of the  undersigned  or its
nominee with DTC through its Deposit  Withdrawal Agent Commission  system ("DWAC
Transfer").

      Name of DTC Prime Broker:_________________________________________________
      Account Number:___________________________________________________________

|_|   In lieu of  receiving  shares of Common  Stock  issuable  pursuant to this
      Notice of Conversion by way of a DWAC  Transfer,  the  undersigned  hereby
      requests that the Borrower  issue a certificate  or  certificates  for the
      number of shares of Common Stock set forth below (which  numbers are based
      on the  Holder's  calculation  attached  hereto) in the name(s)  specified
      immediately  below or, if additional space is necessary,  on an attachment
      hereto:

      Name: ____________________________________________________________________
      Address:__________________________________________________________________

            The undersigned represents and warrants that all offers and sales by
the undersigned of the securities issuable to the undersigned upon conversion of
the Notes shall be made pursuant to  registration  of the  securities  under the
Securities Act of 1933, as amended (the "Act"), or pursuant to an exemption from
registration under the Act.

                  Date of Conversion:___________________________
                  Market Price Days:____________________________
                  Applicable Conversion Price:__________________
                  Number of Shares of Common Stock to be Issued
                  Pursuant to:  (i) Conversion of the Notes:______________; or
                  (ii)  Conversion  of  Conversion  Default  Payments,  Delivery
                  Default  Payments and/or payments  pursuant to Section 2(i) of
                  the Registration Rights Agreement:____________
                  Signature:____________________________________
                  Name:_________________________________________
                  Address:______________________________________
                          ______________________________________


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